Twists and Turns in the Goryeo Zinc vs Youngpoong·MBK Dispute
Youngpoong Side to File Criminal Charges Against Chairman Choi Yoon-beom
Daemyung Sono Accelerates T'way Air Management Takeover
Ourhome Sibling Rivalry Intensifies... Hanwha Group Shows Strong Acquisition Intent
KT&G Engages in Tense Standoff with Activist Fund
Since the beginning of the year, management disputes have been heating up in various places. As the full-scale shareholder meeting season begins in March, the vote battles over management rights are expected to become even more intense.
Twists and Turns... The Never-Ending Goryeo Zinc Management Dispute
The biggest current dispute surrounds Goryeo Zinc. The battle between Youngpoong·MBK and Chairman Choi Yoon-beom's side of Goryeo Zinc, the world's number one non-ferrous metal company, has ignited, with twists and turns continuing.
The management rights competition between the two sides officially began with a public tender offer in September last year. Both sides competitively raised their prices, with the final tender offer prices being 830,000 KRW by Youngpoong·MBK and 890,000 KRW by Goryeo Zinc.
At the Korea Zinc extraordinary general meeting held on the 23rd at the Grand Hyatt Seoul in Yongsan-gu, Seoul, Moon Byung-guk, chairman of the Korea Zinc labor union, along with union members, are shouting slogans. Photo by Jo Yong-jun
When Youngpoong·MBK, who offered the lower price, unexpectedly won the tender offer, Chairman Choi's side aimed for a comeback through a 'rights issue.' However, it backfired. The day after the rights issue announcement, the Financial Supervisory Service conducted an on-site inspection of Mirae Asset Securities, the underwriter of the rights issue. It was revealed that the rights issue had been planned before the tender offer but was concealed from shareholders. Feeling pressured by the investigation, Goryeo Zinc eventually withdrew the rights issue on November 13 last year. The Financial Supervisory Service regarded this as unfair trading and referred the case to the prosecution on the 7th of this month.
Chairman Choi's side pinned their last hope on the 'cumulative voting system,' but even that was halted by the court. It seemed like a moment solidifying Youngpoong·MBK's victory. However, on the day before the extraordinary shareholders' meeting on the 23rd, Chairman Choi's side restricted Youngpoong·MBK's voting rights through a 'mutual shareholding restriction' method. By selling a 10.33% stake in Youngpoong to a grandchild company based in Australia for 57.5 billion KRW, they created a circular shareholding relationship, utilizing a system where companies holding more than 10% of each other's shares cannot exercise voting rights.
Youngpoong·MBK argued that the introduction of this method itself was illegal, but the extraordinary shareholders' meeting proceeded as planned, and Chairman Choi's side retained management rights. Youngpoong·MBK plans to file criminal charges against Chairman Choi and related parties. The situation is described as escalating dramatically.
Daemyung Sono Accelerates Takeover of T'way Air Management Rights
The management dispute over T'way Air is also intensifying. Since July last year, Daemyung Sono Group has been acquiring shares of T'way Air held by JKL Partners, becoming the second-largest shareholder. The difference in shareholding ratio with the largest shareholder, Yerimdang, is only 3.3 percentage points. This year, Daemyung Sono Group has announced a large-scale push to secure management rights, increasing pressure.
Yerimdang is also in a situation where it must defend its position as its core book publishing business stagnates. After ending a management dispute in 2022, Chairman Seo Jun-hyuk of Sono International under Daemyung Sono Group needed his own achievements. Since last year, he has been eyeing the aviation industry. It is also an opportunity for the aviation sector. With Korean Air absorbing Asiana Airlines, there is potential for the low-cost carrier (LCC) industry to grow in size.
Daemyung Sono Group also holds shares in the airline Air Premia, and it is reported that they are considering launching a new airline by merging the two companies. Chairman Seo has mentioned, "Entering the aviation industry will be a new growth engine for Daemyung Sono Group, aiming to become a global leading company." The industry expects the shareholder meeting in March to be a turning point in the management dispute.
Hanwha Group Enters Ourhome Siblings' Management Dispute
As the management dispute between siblings at Ourhome, the second-largest catering company in Korea, intensifies, Hanwha Group has stepped in to acquire management rights. The eldest son of the founder, former Vice Chairman Koo Bon-sung, and eldest daughter, Chairwoman Koo Mi-hyun, are positive about selling. Their combined stake is 57.84%, and they plan to sign a contract with Hanwha Group in February to sell all their shares for 860 billion KRW. Hanwha, which sold the catering and food material division Foodist to a private equity fund in 2020, is re-entering the catering market because the catering business is considered a valuable asset.
The problem is that the fourth sibling and former management, former CEO Koo Ji-eun, is determined to manage Ourhome. She has claimed a preemptive purchase right on the shares held by the current management, her older sister and brother, to Hanwha Group. This claim is based on the company's articles of incorporation, and there could be legal disputes over its validity. Additionally, they must overcome the board of directors, where the current management holds the majority.
KT&G vs Activist Fund... 1 Trillion KRW Lawsuit Filed
Although not a management dispute, KT&G is engaged in a confrontation with an activist fund. Flashlight Capital Partners (FCP), an activist fund holding about 0.5% of KT&G shares, has filed a lawsuit worth about 1 trillion KRW.
FCP claims that KT&G's former board of directors caused enormous damage of about 1 trillion KRW to the company by donating 10.85 million treasury shares to affiliated foundations and in-house welfare labor funds free of charge or at low prices over 17 years since 2002. Earlier, in January last year, FCP sent a demand letter to KT&G to file a lawsuit seeking compensation of about 1 trillion KRW against 21 former and current inside and outside directors, including former President Baek.
In response, KT&G denied the allegations. The company explained, "Half of the disposed treasury shares were paid contributions to the employee stock ownership association, so they are not donations," and "From the perspective of procedural legitimacy, all procedures, including faithful execution of board resolutions and transparent disclosure, were fully complied with." They added, "Contrary to FCP's claims, the treasury shares contributed to public interest corporations account for only 0.87% (about 990,000 shares)."
Industry insiders view this as FCP pressuring KT&G's board ahead of the regular shareholders' meeting scheduled for March. At last year's shareholders' meeting, FCP opposed the appointment of then Senior Vice President (now President) Bang Kyung-man, raising questions about the independence and fairness of the presidential candidate.
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